Taking Over Mortgage Payments

Many are always curious on how to take over mortgage payments which is possible if you follow some simple steps. Frequently a home owner wanting someone to take over their mortgage payments could happen for several reasons. This is also known as assuming a mortgage, and is most commonly used when the owner is predicting they will be unable to make future payments, or are beginning a foreclosure process on their home.

Assumable mortgages are not as common today as they once was, however they are still around. Assumable mortgages actually have been around since the late 1970's, however have never been all that popular due to two clauses that can hinder your ability to take over mortgage payments. The first is a “Due On Sale” clause which means that the remaining amount of the mortgage is due upon the sale, transfer, or change of ownership. The second being the most common that more recent loans are not assumable at all meaning there is no way for you to just take over the mortgage payments. There are multiple laws in place to prevent assuming mortgages but there are some exceptions to the rule. Most lenders also can change the “terms” of a mortgage should it be assumed by another future owner.

To take over mortgage payments you simply need to enter an agreement with the owner, and get approval through their lender. FHA & VA loans are one of the few remaining that are still assumable, however you still have an assumable package that you must fill out if you wish to have someone else assume the mortgage. Each lender will have a different process, this is where you must followup with their lender to see what exact steps are required.

• With all these disadvantages why would you want to take over someone's mortgage payments then? Well you could potentially lock in a much lower fixed interest rate.

• Shorter length of payments as they may have already been paying on it for the last ten years. Please note though the seller will want some form of compensation for any equity built up in the house.

• The closing costs are generally much cheaper if someone assumes a mortgage versus the traditional buy, and sale method.

• This can help prevent foreclosure which is a big plus to the owner if they are behind in their payments.

In the end, taking over mortgage payments could potentially save you thousands of dollars over the span of the loan.